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New Accounting Measures Will Push
Japanese Firms to Sell Weak Units

By

Jason SingerStaff Reporter of The Wall Street Journal

Updated April 23, 2001 12:01 a.m. ET

TOKYO -- In crunching the long-term earnings numbers on 1.2 million Japanese companies, economist Garry Evans found a jaw-dropper: Since 1956, Japanese firms collectively earned less from investments than it cost them to borrow, he calculated.

"In other words," the HSBC Securities Japan Ltd. economist says, Japanese companies "have consistently destroyed value" for half a century. He chalks it up partly to Japanese executives' unwillingness to sell or close unprofitable operations, a practice rooted in preserving...